The Irrelevant Investor writes:

Stocks got washed out in the third quarter. Whether you were looking at prices or people’s reactions to said prices, it was hard to find anything positive to say other than things are so bad they’re actually good.

That might sound silly, but it’s not. It’s the truth. The riskier stocks feel, the less risky they get over time. And I cannot emphasize “over time” enough. Because sometimes stocks fall a lot and then they crash. But full-blown crashes are not common, and while it’s important to be aware of them, they should not be anyone’s base case. If you think every bear market leads to a global crisis, you’re going to have awful long-term returns and a ton of anxiety on top of it.

Last week, less than 85% of stocks in the S&P 500 were below their 200-day moving average. This has happened 219 times since 1987, with most of these periods clustered together. 1987, 2002, 2008, etc. The only time returns weren’t positive one year later was September 2001 (-13%), and October 2008 (-6%). That’s it…

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